Euro Ticks Higher, Markets Eye Tight US Election

EUR/USD has ticked higher in the Monday session. Currently, the pair is trading at 1.1070. On the release front, Eurozone numbers were mixed. German Factory Orders declined 0.6%, below expectations. However, Eurozone Sentix Investor Confidence jumped 13.1 points, well above the estimate. Eurozone Retail Sales posted a second straight decline, with a September reading of -0.2%. There are no major US releases on the schedule. On Tuesday, the US releases JOLT Job Openings and all eyes will be on the US presidential election.

The euro is coming off a strong week, having gained about 150 points. Eurozone Service PMIs were a mix in October. The German report jumped to 54.2, edging above the forecast of 54.1. This was significantly higher than the September release of 50.9 points. The Eurozone release improved 52.8, but this fell short of the estimate of 53.5. In the US, employment numbers were solid, but the dollar failed to make headway against the euro. US nonfarm payrolls improved to 161 thousand, but this fell short of the forecast of 171 thousand. Average Hourly Earnings rose 0.4%, edging above the estimate of 0.3%.

All eyes are on the US presidential election, with the markets clearly preferring a win by Democratic candidate Hillary Clinton. Although polls continue to point to a tight race, Clinton appears to have the upper hand, as she has an easier path to garnering the 270 electoral votes needed to claim victory. The Clinton campaign received a boost as the FBI announced that it had no reason to change its conclusion that Clinton was not guilty of criminal wrongdoing in her use of private emails while she was secretary of state. There are different market scenarios depending on the actual outcome of the election, with the worst case scenario being a too-close-to-call result. If either candidate fails to deliver a decisive victory, the leadership vacuum and uncertainty surrounding the result could trigger higher volatility in the markets. If the election does spark market volatility, the Federal Reserve could hold off from raising interest rates at its next policy meeting in December.

EUR/USD Fundamentals

Monday (November 7)

• 7:00 German Factory Orders. Estimate +0.2%. Actual -0.6%
• 9:00 Eurozone Retail PMI. Actual 48.6
• 9:30 Eurozone Sentix Investor Confidence. Estimate 8.7. Actual 13.1
• 10:00 Eurozone Retail Sales. Estimate -0.3%. Actual -0.2%
• All Day – Eurogroup Meetings
• 15:00 US Labor Market Conditions Index
• Tentative – US Loan Officer Survey
• 20:00 US Consumer Credit. Estimate 17.6B

Upcoming Key Events

Tuesday (November 8)

• 15:00 US JOLTS Jobs Openings. Estimate 5.67M
• All Day – US Presidential Election

*All release times are EDT

* Key events are in bold

EUR/USD for Monday, November 7, 2016

EUR/USD November 7 at 11:05 GMT

Open: 1.1094 High: 1.1110 Low: 1.1047 Close: 1.1070

EUR/USD Technical

• EUR/USD recorded slight gains in the Asian session but retracted. The pair  has posted slight losses in European trade
• 1.1054 is providing weak support
• There is resistance at 1.1150

Further levels in both directions:

• Below: 1.1054, 1.0957, 1.0821 and 1.0708
• Above: 1.1150, 1.1278 and 1.1366
• Current range: 1.1054 to 1.1150

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Monday session. Currently, short positions have a majority (57%), indicative of trader bias towards EUR/USD breaking out and moving upwards.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.